Introduction
Vietnam has transformed itself from a poor, underdeveloped country into one often referred to as an economic miracle. One reason is that, over the past 20 years or more, the economy has been growing at an average annual rate of 7%, and Vietnam has become one of the world’s 10 fastest-growing economies (Vu et al., 2021, p. 216). Over the past five years, more than 8 million jobs have been created, and unemployment has dropped to 4.5% (Vu et al., 2021, p. 216). This occurred due to Vietnam’s gradual but decisive transition from a planned to a socialist-oriented market economy, characterized by various forms of ownership of productive assets, with the public sector continuing to play a leading role. As a result, Vietnam is beginning to encourage large businesses to enter and operate in its market.
Lyft is a taxi aggregator and ride-hailing service, a publicly traded company based in San Francisco, California, USA. The company enables users to find drivers who use its service and are willing to provide transportation at a reasonable fee through its website or mobile application. Lyft is currently available to about 95% of the US population and also operates in Canada and Europe (Schaller, 2021, p. 2). The company’s transportation network combines car, bicycle, scooter, and transit rentals in one app.
Accordingly, the organization may try to enter the international market and offer its services in Vietnam. Due to the rapid economic development of the Asian region and Vietnam, they will be able to build a broad customer base (Schaller, 2021, p. 2). Therefore, it is essential to evaluate Vietnam’s foreign market, including its competitive landscape, Lyft’s market presence, and its marketing mix.
Foreign Market of Vietnam
External Environmental Analysis
Political
It is worth noting that Vietnam has recently become a popular destination for investment and business expansion. The reason is that it is a Southeast Asian country with a population of almost 100 million people, who could become potential consumers of its products and contribute to the manufacturing industry (Vu et al., 2021, p. 217). Moreover, Vietnam has a unique political environment that continues to foster business development. The reason is that Vietnam is a socialist republic with a one-party communist government that tries to liberalize the state and create conditions for economic activity.
At the same time, Vietnam’s provinces are divided into districts, where, like in cities and villages, people’s councils are elected by the population. Since 1997, provinces and other administrative units have been granted the right to engage in foreign trade operations (Vu et al., 2021). Thus, the state’s political situation stimulates investment, but bureaucratic and corrupt problems hinder it. Hence, this creates certain risks for new companies entering the Vietnamese market due to shadow business and officials’ own interests.
Economic
Vietnam, with its rapidly growing economy, large workforce, and all-powerful Communist Party, is becoming the new China (Vu et al., 2021). As such, Vietnam’s economic growth has been on the rise lately, transforming it into one of Asia’s most developed economies. American Intel and German Bosch, as well as South Korean companies such as LG Electronics and Samsung Electronics, and Japanese companies like Canon, Olympus, and Panasonic, have already established production facilities in Vietnam.
The country’s favorable geographic location and a growing labor force, which adds 1 million people per year, are key factors attracting foreign businesses. Vietnam is also a member of the VISTA group, which comprises promising, high-growth markets for investors alongside Indonesia, South Africa, Turkey, and Argentina. In 2015, the volume of foreign direct investment in Vietnam reached $100 billion (Vu et al., 2021).
Over the past 30 years, the decentralization of the economy and the transition to an open-door policy have allowed Vietnam to increase its annual per capita income from less than $100 to $2,000. During this time, the proportion of Vietnamese living below the poverty line has fallen from 50% to 3% (Vu et al., 2021). In recent years, the country’s economic growth rate has stayed below 5%. Accordingly, this suggests that another economic superpower is emerging in Asia.
As a result, the country’s favorable economic environment is influenced by a relatively young middle class, advantageous location, and continued investment. To enhance its economic position, the Vietnamese authorities are participating in regional trade agreements, including the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement (EVFTA). Consequently, they offer many foreign companies an opportunity to enter the Vietnamese market (Vu et al., 2021).
Social
It is also worth noting that Vietnam’s socio-cultural context contributes to growing interest in the country. The main religion in Vietnam is a system of folk beliefs centered on rituals to honor ancestors, which are strictly observed by the majority of the country’s inhabitants (Vu et al., 2021). This religion lacks a formalized doctrine, a hierarchy of clergy, or a social organization; therefore, it is not recognized as a religious denomination.
Nevertheless, a significant part of the population professes Confucianism and Buddhism, which makes the country similar to other Asian countries. Society values basic qualities such as family values, collectivism, and respect for different cultures (Vu et al., 2021). Thus, this is evidence of a tolerant population willing to work for foreign companies at relatively low wages. Furthermore, rising disposable incomes have driven demand for consumer goods, including Western brands. However, local preferences, language barriers, and cultural nuances should be taken into account when entering the market (Vu et al., 2021). Consequently, it is essential to consider them when building a strategy and branding in Vietnam.
Technological
Vietnam has a favorable technological environment that is constantly evolving. Accordingly, the main urban centers in Vietnam have developed infrastructure and are using new technologies to improve residents’ living standards. Moreover, the Internet and various forms of online marketing and promotion are popular in Vietnam, increasing the likelihood of e-commerce development (Vu et al., 2021). The advantage for companies seeking to enter the Vietnamese market is that the government also emphasizes the promotion of digitalization and technological innovation across various sectors. Hence, they can get support from the government, which is backed by digitalization programs.
Legal
Furthermore, the legal regulations governing business in Vietnam are constantly evolving and improving. This is because the regulatory framework is constantly adapting to the process of attracting capital to the country. Consequently, the government is trying to establish favorable conditions for foreign companies to enter the market (Vu et al., 2021). Hence, the easing of legislation creates particular difficulties for companies that must comply with all the changes and operate under local laws governing intellectual property, taxes, and labor. However, in general, there is a shift towards economic liberalization and government support for foreign companies.
Competitive Environments
It is essential to note that the Vietnamese market is designed to foster competition, and the government is implementing policies to stimulate competitive behavior. This means that the primary industries with high competition are manufacturing, retail, and services (Cung, 2020). This is because not only domestic but also international companies operate in the country, which has already established a strong presence in this market. Therefore, to successfully enter the Vietnamese market, it is essential to research the main competitors, their market share, pricing policies, and distribution networks.
Meanwhile, another critical element is the logistics system. Vietnam is an attractive strategic location for production, but it also poses logistical challenges. For example, ports are often overloaded due to the high number of deliveries and shipments (Cung, 2020). This can negatively affect the efficiency of the supply chain. For this reason, companies need to assess logistics capabilities and find ways to adapt to them before entering the Vietnam market.
Despite Vietnam’s logistics challenges, many industries continue to develop. Tourism, technology, and e-commerce are the major sectors of growth (Cung, 2020). Therefore, it enables foreign companies to collaborate with local partners, thereby enhancing their competitiveness. In addition, the Vietnam market has a competitive advantage due to its relatively young labor force, which works for less than workers in the United States and Europe. However, the market is facing increasing competition for skilled personnel, as many companies are interested in hiring such personnel in Vietnam rather than importing them from abroad (Cung, 2020). Vietnam has a large, relatively young labor force, offering economic advantages for businesses. Thus, foreign businesses in Vietnam continue to invest in technology and education to meet their needs.
Overall, the Vietnamese market offers significant opportunities for foreign capital to enter and for new companies to establish a presence. However, while the advantages, such as labor force, innovation, and favorable geographical location, should be taken into account, the disadvantages should also be assessed. The reason is that poor logistics and bureaucratic obstacles can negatively affect business operations (Cung, 2020). Hence, it is crucial to develop a strategy that is fully adapted to Vietnam’s socio-cultural and specific conditions and characteristics.
Lyft in the Foreign Market
Segmentation
For Lyft to enter the Vietnamese market, it is crucial to segment the target audience. Considering that large urban centers are more technologically advanced and are home to people with greater financial resources, Lyft should focus on them. Ho Chi Minh City and Hanoi are significant cities, as they have high demand for transportation services from both the local population and tourists (Ward et al., 2021). Accordingly, it is essential to focus on young people proficient in new technologies who can plan the desired transportation route. Moreover, in big cities, people have higher incomes, enabling them to use transportation services more frequently.
As Vietnam becomes an increasingly popular tourist destination, the need for transit services is growing in importance for tourists. Therefore, Lyft should offer transportation services for travelers that will include the most popular routes (Ward et al., 2021). These include transportation to hotels, airports, and attractions. Consequently, advertising in travel media will provide information about Lyft during trip planning, making it easier to use this company as a transportation provider in Vietnam.
Moreover, it is necessary to identify the primary target audience for Lyft services. Therefore, it is necessary to consider Vietnam’s urban growth and the tourism sector. Hence, the two main customer groups are young Vietnamese professionals and tourists. This is because they can afford a comfortable trip and want to save time on transportation (Ward et al., 2021). This means these people are focused on finding convenient travel options, and Lyft services can help meet their needs.
Positioning
To reach the market and build its customer base, Lyft needs to communicate the benefits of its campaign and emphasize them in its marketing plan. First, the company can ensure passenger safety and guarantee reliability. To achieve this, Lyft needs to introduce not only driver vetting but also allow customers to reject drivers who do not meet their needs. Moreover, Lyft’s customer support service should be available 24 hours a day, seven days a week, so that people can report issues to a customer service representative (Ward et al., 2021). For those who prefer not to contact the support team, a chatbot should be launched that can also accept customer feedback and suggestions.
Secondly, it is essential that customers can see the route before the trip and confirm it (Schaller, 2021). This will help avoid mistakes due to incorrect location and negative customer feedback. Additionally, Lyft needs to position itself as a company that cares about customer convenience and values their time. Thus, a convenient and easy-to-use app is an essential element for this (Schaller, 2021).
The application should have an excellent design and ensure quick car ordering and seamless communication with the driver. This way, customers will be sure that the driver will fulfill the order accurately and explain their preferences to them (Ward et al., 2021). Moreover, the program provides a convenient way to track travel time, accounting for traffic on the roads. This is an advantage for individuals living in a fast-paced environment who need to accurately track their time.
Meanwhile, Lyft, unlike its competitors such as Uber, can offer lower ride prices. Therefore, this will enable Lyft to enter the market and quickly gain customers’ acceptance. Another way to demonstrate competitive pricing is to show customers a transparent pricing model (Ward et al., 2021). Accordingly, in the application, users will be able to view the cost of a car viewing, the price per kilometer, and any available discounts. Moreover, the company can offer a loyalty card for customers who use Lyft services daily. In this way, Lyft will not only gain a loyal customer base but also attract new ones through favorable ride offers.
Given Asian culture, Lyft should also provide a personalized experience for each customer. That is, for religious or cultural reasons, customers can choose the driver’s gender, specify the music they want to listen to in the car, and describe their needs (Ward et al., 2021). The company should ensure that drivers will provide quality services independently of their customers’ religious beliefs and respect their cultural characteristics. This will enhance the customer experience and make Lyft a carrier that respects the individual.
Furthermore, as an international company that operates beyond the Vietnamese market, Lyft should position itself in all countries as a company with strong social responsibility. That is, Lyft should support sustainable development and work to reduce carbon emissions. Additionally, in Vietnam, Lyft can support local communities and projects that fight against climate change (Ward et al., 2021).
Furthermore, in all the countries where Lyft operates, it is essential to provide a reliable and convenient ride service. Hence, the company needs to conduct ongoing research on regional markets to make changes at both the global and local levels, as seen in Lyft (Schaller, 2021). As a result, this will ensure that Lyft becomes a reliable global carrier that adapts to changing market conditions and responds quickly.
Marketing Mix for Lyft in Vietnam Using Cultural Aspects of Hofstede
It is essential to emphasize that the marketing mix is crucial for Lyft to enter the Vietnamese market and compete effectively with local carriers. Moreover, Hofstede’s theory of cultural dimensions can be used to develop a marketing mix (Jackson, 2020). It will help to adapt marketing strategies to the cultural characteristics of the Asian region. Accordingly, each element of the marketing mix should include and be supported by Hofstede’s theory.
Product
For the company to stand out in the Vietnamese market, it must incorporate cultural advantages and values into its product offerings. That is, the company should not just offer a ride from one end to the other, but also ensure that customers’ personalized wishes are fulfilled. For example, do not play music on religious holidays or when it contradicts their life views (Jackson, 2020). Furthermore, Vietnamese consumers value personalized experiences. Lyft can create a personalized cab for each user that includes their main wishes.
Price
Meanwhile, when formulating a price proposal, it is essential to consider Vietnam’s cultural attitudes towards pricing. It is crucial to consider that Vietnamese customers often negotiate prices and seek lower prices for services or goods (Jackson, 2020). Accordingly, Lyft can introduce dynamic pricing options that allow customers to negotiate fares or offer promotional discounts during certain cultural events. However, the company’s primary condition is the need to provide high-quality services at an affordable price (Jackson, 2020). Therefore, the company needs to emphasize its ability to provide quality service to customers at a favorable price for both parties.
Promotion
To facilitate the company’s entry into a new market, promotional activities should be implemented. For the Vietnamese market, it is necessary to adapt the advertising style to the country’s socio-cultural and religious characteristics (Jackson, 2020). That is, it is necessary to involve famous people in advertising because Vietnamese people trust celebrities and value influencers’ opinions. Thus, organizing such a promotion through social media or traditional advertising would require a significant investment. Lyft can also leverage the significant trust customers have in each other’s reviews and encourage them to leave comments about the company on the site (Jackson, 2020). In this way, Vietnamese individuals with strong community ties will perceive Lyft as a reliable transportation provider and trust the experiences of their friends and acquaintances.
Place (Distribution)
It is also crucial to consider that Vietnamese culture is heavily influenced by communication. If people consider the verifier’s company reliable, such advertising will spread quickly within the community. This requires a high reputation and positive customer feedback. Accordingly, the officials will have a sense of trust and familiarity with the company’s staff (Jackson, 2020). Therefore, they will continue to use Lyft services.
Communication between drivers and customers is one of the most effective ways to promote Lyft. Thus, Hofstede’s theory of cultural dimensions is an essential tool for Lyft, helping it develop a unique marketing strategy based on the cultural perceptions of Ventnan’s residents. Accordingly, customer education, ongoing promotions, and a loyalty program for potential customers will help to create strong ties between the company and its customers (Jackson, 2020). Moreover, promoting Lyft with the help of celebrities and during rides will enable the company to quickly spread the word about its services. Thus, it can help Lyft increase its market share and maintain a competitive advantage in Vietnam.
Conclusion
Thus, Vietnam is gradually becoming one of the leading countries in Asia. The government is attempting to attract foreign investment, but internal issues, including bureaucracy and corruption, hinder its efforts. In addition, Vietnam has a young, relatively inexpensive labor force, a favorable geographic location, and a high level of technological development. Although there is a problem with Floo, it is therefore necessary to take this into account when drawing up a business plan.
Nevertheless, Lyft can position itself as a brand that targets tourists and young city residents who value comfort. Moreover, taking cultural and religious peculiarities into account is essential for pricing policy, marketing strategy, and promotion channels. Thus, the marketing mix is based on cultural peculiarities and includes close communication between the company and customers. Accordingly, this can help ensure Lyft’s successful entry and operation in the Vietnamese market.
References
Cung, N. H. (2020). Impact of foreign direct investment on economic growth in Vietnam. Advances in Management and Applied Economics, 10(2), 1-6.
Jackson, T. (2020). The legacy of Geert Hofstede. International Journal of Cross Cultural Management, 20(1), 3-6.
Schaller, B. (2021). Can sharing a ride make for less traffic? Evidence from Uber and Lyft and implications for cities. Transport Policy, 102, 1-10.
Vu, T. D. T., Huy, D. T. N., Trang, N. T. H., & Thach, N. N. (2021). Human Education And Educational Issues For Society And Economy-Case In Emerging Markets Including Vietnam. Ilkogretim Online, 20(2), 216-221.
Ward, J. W., Michalek, J. J., Samaras, C., Azevedo, I. L., Henao, A., Rames, C., & Wenzel, T. (2021). The impact of Uber and Lyft on vehicle ownership, fuel economy, and transit across US cities. Iscience, 24(1), 1-10.